Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

Tyler Durden's picture

Following the biggest rout to the Ruble in ages, Russia - unlike Mario Draghi - instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to... hold on to your hats... 17.00%, a 650 bps increase!

From the press release:

The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks.

 

In order to enhance the effectiveness of interest rate policy loans secured by non-marketable assets or guarantees for a period of 2 to 549 days from 16 December 2014 will be granted at a floating interest rate established at the level of the key rate of the Bank of Russia increased by 1.75 percentage points (Previously these loans for a period of 2 to 90 days, provided at a fixed rate).

 

In addition, to enhance the capacity of credit institutions to manage their own currency liquidity was decided to increase the maximum amount of funds to repurchase auctions in foreign currency for a period of 28 days from 1.5 to 5.0 billion. US dollars, as well as on similar operations for a period of 12 months on a weekly basis.

And for the Russian-speakers, the full breakdown of rates.

 

Few markets are open but the 1month forward Ruble market just dropped (Ruble rallied) over 2.5 handles...

 

RSX (ETF) is starting to rally after-hours...

 

Chart: Bloomberg

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Publicus's picture

Russia needs to realize that the only way to stop the fall is to make it unprofitable to short the Ruble. I suggest a devaluation to 100, and stop import from enemy nations.

kaiserhoff's picture

Well the Saudis got his attention.

   Now what?

Publicus's picture

Seperate capital and trade accounts, and make the capital account non-convertable. Then peg the ruble with the yuan.

 

Stop all import and export with the enemy nations. Then free the nations sponsoring terrorism, eg Saudi Arabia.

SWRichmond's picture

Capital likey 17% return.

BTCTalks's picture

Ahh the wise Central Bankers. Previous hikes weren't enough, so lets go for a full fib increase. That should scare the algo sellers.

economics9698's picture

Standard banking 101.  Kill the bad investments, attract capital, reboot.  It will pay off in 18 to 30 months.

China should follow shortly. 

TheAnalOG's picture

 

 

Look.

Fuck your mom, fuck your cat and fuck you!

 

BUY BITCOIN!!!

 

https://btc-e.com/

salvadordaly's picture

I'm afraid it's true. (shaking head)

bunzbunzbunz's picture

its not me...i promise.

if it was me, i would be offering a referral link to a bitcoin faucet. but they started forcing you to view ads. so fuck them.

The Juggernaut's picture

I can't wait for Russia to back their currency with gold.  Checkmate.

jbvtme's picture

fuck the bankers. the stench of their chicanery overwhelms.

Richard Chesler's picture

6 million tribe thieves just shat their pants.

 

AldousHuxley's picture

History Repeating?!

 

1998

March - Yeltsin dismisses prime minister and his cabinet and replaces with a 35 year old.

May - 100 basis point increase by central bank to defend ruble; strikes by union workers over unpaid wages

July - $22B offered by IMB + Worldbank to swap short term debt with long term euro bonds...$5B are stolen; Yeltsin promotes Putin to security chief;

August - Russia defaults on her debt; 90 day moratorium on debt payments; central bank voids rub-usd spot trades

September - Russia abandons RUB/USD exchange rate bands and float the ruble freely eventually losing 2/3 of rubles value within a month.

October - Russia appealed for humanitarian aid with 84% inflation rate in 1998

 

1999

May - attempted impeachment of Yeltsin

August - Yeltsin promoted Putin to be his successor

December - Yeltsin resigns with approval rating of 2%

 

2014

Central bank hikes up interest rate by 650 basis points

Italian soccer coach for Russia complains he hasn't been paid since June 2014. Russia will be hosting 2018 world cup.

.....

Sandmann's picture

Boris Berezhovsky was kingmaker and feared FSB retaliation when Yeltsin died so they needed FSB man to take over and grant Yeltsin family immunity from trial for corruption and treason. Berezhovsky thought he could control Putin and had Litvinenko as his choice to head FSB once Putin moved up.

Oligarchs thought Russia was Africa or Mexico and have no learned a lesson. The USA is itching for the war they could not have in the 1950s......it is time to contemplate a post-nuclear-strike USA which will b e somewhat different from minor incidents like 9/11

Citxmech's picture

What do you expect with someone whose name seems to have something to do with being the original anal gangster?

TheAnalOG's picture

Hey we bees in advertising forcing wills on people for 36 years.  Own families still not talk to eponymous estranger for suffrage of $12,000 off BTC highs.  Promise the moon, found in the gutter.  Now yous come round and saying we do all we wrong?  Fuck we!

TheAnalOG's picture

Hi bunzbunzbunz!  It's been a long time!  'Member when we wuz young and we used to go down to the creek and pick up junk?

putaipan's picture

even tho' i'm pretty sure that was aimed at me .... i don't really hate fonestar. not nearlly as much as i miss boris.

Sokhmate's picture

.. and fuck your husband, cuz they're rapin errbody out here

SAT 800's picture

No matter how rude and ignorant you are; I still refuse to BUY BITCOIN !

TheAnalOG's picture

Hey fuct you.  We tell you to buy and you do not buy?  Why you not to go to not buy?  Bitcoin rally to $3,000 next.

JustUsChickensHere's picture

Wrong viewpoint .... what you mean is that USD will collapse to $3000/BTC next...  hyperinflation against sound money.

funthea's picture

fonestar... is that you?

TheAnalOG's picture

We is you.  You is in we.  We think we ban we?  We think badly of factly.  Shirley yessly.

winchester's picture

you bring notin here, go away

cnmcdee's picture

Don't talk shit about grumpy cat.

BeanusCountus's picture

At these prices the russian bonds are a better deal.

Mad Muppet's picture

So, Analog/Fonestar finally came out of the closet.

Son of Captain Nemo's picture

 

 

In Russia, BANKS pay YOU.

b

+1,000,000,000,000

The Western CBs are about to visit "Waterloo"!

rccalhoun's picture

yellen is counter-punching with a 1 basis point hike

BurningFuld's picture

Next announcement: Hey Europe you dumb bunch of fucks we're only taking GOLD for Gas now.

Was that just a gas explosion I heard?

palmdetroit's picture

Why? then they wouldn't sell any...

Bananamerican's picture

I hope for the world's sake that this, and any other moves Russia has up her sleeve works...

The idea of a global pax Americana might have seemed cool to me as a kid but a global pox Amerikano does NOT.

Any captured megastate like ours can only bring absolute global corruption to match its absolute power.

and in the spirit of christmas: "You're...the Board here. You do what you want with this thing. There's just one thing more, though. This world needs this measly Slavik institution if only to have some place where people can come without crawling to Goldman. Come on, Uncle Billy!"

DoChenRollingBearing's picture

 

 

palmdetroit

+ 1

Good observation.  

The "Law of Unintended Consequences" works both ways...

If Russia were to do that for long, the USA could revitalize its own gas exports to Europe.  Yes, the USA has plenty, bump that price up a bit, Russia, and Pennsylvania, Texas, Louisiana, Oklahoma, West Virginia and many other states would thank you very highly!

*  *  *

Lower ruble and lower hydrocarbon prices both mean Russia can import less gold.  And there would be pressure to export more gold from Russia.

Less gold demand from Russia?  Lower prices for us...

 

Angry Plant's picture

They would be dancing in the streets in Pennsylvania if Russia did that. If Russia were smart it would back ruble with oil once it hits bottom in a few months. 2500 rubles gets you one barel of oil. Then smile as they watched all the money buying rubles in order to park money in oil cheaply.

Real Estate Geek's picture

God DAMN this season of the 'Great Game' is exciting.  I just wish the stakes were lower so that I could be enjoying the show, instead of developing a Maalox habit.

mkkby's picture

Here is the score card so far.

Russia gains Crimea.  Russia loses it's currency - mostly little people suffer with inflation.  The rich most likely planned ahead and have hard assets.

US loses some of shale industry and some junk debt.  Longer term may lose petro dollar.

I'd call it a draw at this point.  To the Russian people, life sucks again.  But I don't think there was any choice.  Nato was going to continue presssing and a line had to be drawn somewhere.

 

 

snowlywhite's picture

right; 17 pa when your ccy lost 50%+ of it's value.

 

go get their money...

Peter Pan's picture

I would agree with you if inflation in Russia was running at 50% which it isn't.

I would also agree with you if the net debt situation, the debt to GDP ration and other metrics were also worse than they are in the USA which they are unfortunately aren't.

 

I would also agree with you if this change in the value of the ruble was driven by fundamentals rather than politics and the cheap money strategies of the FED which have spawned the shale oil "miracle" which is now travelling towards an immovable wall.

A Nanny Moose's picture

Well...in Cyprus anyway. But who's counting?

NoVa's picture

BANKING 101 INDEED.

Pay an interest rate to attract fresh capital, protect against FX currency risks, Put the capital to productive use to generate REAL output - not excess reserves for the bankers to park with the Fed to earn 25 bps.

Check against Oblamo - hopefully, not Check Mate (ever for our sake).